Threat to the Euro?

It seems Greece is following Ireland in their ‘blanket guarantee’ for savers.“For their actions, if followed by other European Union countries, it could pose a threat to the EU and undermine the euro”.

Hi Charlie Seems my 1.50 rate against the Euro once again may not be to far out then 😆 Never know if the rates return to those levels with the fall in value of the property prices in Spain the Brits may return for the bargains. Heaven help the Spanish. Only joking so no one takes a dig. 😉

😯 😉 A friend of ours was staying over with us this week. He and his wife have lived in Spain for nearly 3 years now. He fixed an exchange rate of 1.47 euros to the pound that expires next March. A shrewd move!

I find it hard to share the criticism of the Irish and Greek governments in guaranteeing all savings with their banks. They are only stating explicitly what our government has adopted implicitly. The experience of the run on Northern Rock last year with people queuing around the block to withdraw their money meant the government would never allow a retail bank to go under. It could not accept another run on a bank or worse a bank collapse. This would entirely undermine their claim of financial competance and threaten the entire banking system and our economy to boot. That is why they quickly stepped into deal with Bradford & Bingley.

If I am right the Financial Services Compensation Scheme (FSCS) which guarantees deposits of up to £35,000 (£50K from Tuesday) is largely an irrelevance. As it only applies in the event of a bank failure I cannot see that the FSCS will come into operation for the retail banks in the current climate. Effectively therefore the UK government is underwriting all deposits.

Another reason why I am not critical of the Irish is I see that competition is good for the EU and it citizens. Surely the EU should be about access to better products and services across its borders. In a similar way many UK companies are relocating to Ireland through lower rates of corporation tax. This should concentrate the minds of our Treasury.

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